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Farm bill 2012: Bill wins measured White House support

The bill's promised savings are $23.6 billion over 10 years. | Reuters

That experiment quickly collapsed when prices dropped precipitously in 1998, aggravated by the Asia currency crisis. Congress ended up redoubling direct cash payments, together with a new “market loss” program that evolved into counter-cyclical aid for distressed producers in the 2002 farm bill.

For all these reasons, many growers remain nervous about the thinking behind the Senate bill. But the record farm income of recent years — and the pressure to cut subsidy costs — has let to this second attempt.

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Two big changes since the ’90s now shape the debate: the immense growth in the crop insurance industry and the federal ethanol mandate.

Premium discounts have made it much more feasible for producers to buy coverage and manage their risks. Between 1995 and 2011, the acreage covered by such “buy up” policies had more than doubled from 105,392 acres to 246,266 acres. And with generous taxpayer help, the industry now markets options that allow growers to insure against not just bad weather but sudden price declines.

At the same time the federal ethanol mandate has driven up corn prices, also helping soybean and wheat producers. And with crop insurance as a parachute of sorts, this new synergy has emboldened those in the Midwest Corn Belt willing to take a more “market oriented” approach.

Corn and soybean producers already benefit far more from crop insurance premium subsidies than they do regular commodity program assistance. And at the urging of these groups, the Senate bill plows back $28.5 billion in 10-year-savings to pay for a new Agriculture Risk Coverage plan that helps reduce crop insurance deductibles by 6 to 8 percentage points.

By comparison, Southern growers begin the Senate debate with less of a history in crop insurance and much greater investment in the commodity title that would be cut. Seeing the handwriting on the wall, the National Cotton Council carved out a new revenue insurance option for its growers — with an 80 percent premium discount.

But rice and peanut growers are left at a decided disadvantage. Much as the “free-market” forces want them to jump out of the plane, too, they are less sure of their chute and more fearful of the fall.

The ethanol mandate adds another twist to the debate.

On one hand, target price supports, which try to establish some floor as a percentage of production costs, are dismissed as too government-heavy even when they don’t guarantee a profit.

At the same time, the ethanol mandate — itself driven by government — had helped to spur such high corn prices that in the short run the new “free market” approach almost locks in a profit for many Midwest producers.

This most of all sticks in the craw of Southern growers, especially for rice, which has a long history of being hurt by trade barriers with customers in Cuba or the Mideast.

Readers' Comments (7)

As someone who grew up on a farm I want everyone to know that it is a BUSINESS and not a right! Why should I subsidize someone to be a farmer when no-one subsidizes me to be in a different business? It is time to get the romantic idea about farming out of the political arena and get it into capitalism. If you cannot make money farming then close up and move on. Do not have your political lackeys stick their hands in my pocket taking money from me and my family to give someone (many foreign owned corporations) to continue to farm. Commercial farming works but I do not need to subsidize large (many foreign owned) corporations to farm. IT IS A BUSINESS!!!

Farmers are doing very well in my area on rural NY. The barns and grain bins, are getting bigger, and monsterous half a million dollar John Deere tractors are littering the landscape. Every hedgerow in a field smaller than 50 acres has its hedgerows removed so the big machines don't have to be driven in a tight area. All of the land near me never hits the free market when it is for sale. There are deals done way before the property is even available, where farmers are overpaying for land so they can own it, as opposed to lease it. And this is all happening, thanks to the US government.

Taxes on vacant farmland stays static while land that has a home on it, or goes to development, is taxed into submission. Farmers had it tough, but at this point they aren't paying their fair share. When you have farmers buying land instead of leasing it, you know their tax rates are too low.

Today's farmers are pretty shrewd. They use FHA money to pay the bills while they store their whole season's harvest in grain bins, waiting for the commodity market to choke, and then they sell. There will be many food mini-crisis in the next few years as they start colluding at a national level. Its coming. Farmers are just as greedy as major corporations. Its all about the money.

The vast majority of federal spending in the Senate farm bill, which is estimated to cost over $100 billion annually, is going toward ........food stamps.

This legislation will spend $82 billion on food stamps next year, and an estimated $770 billion over the next ten years.

Food stamp spending has more than quadrupled in the last decade.

It has increased 100 percent since Obama took office.

Federal funding for the Supplemental Nutrition Assistance Program (SNAP) program has doubled since 2008

These 2 programs account for 80% of the Farm Bill.

Crop insurance, commodities and conservation....... make up the remaining 20 percent of the FARM BILL legislation.

One of the amendments to the bill would require states to verify if individuals receiving food stamps are legally residing in the U.S.

This amendment would simply require the government to use a simple program called SAVE, similar to the popular E-verify system, to ensure those adults receiving benefits are in fact lawfully in the country.

skint: food stamp funding has increased because the conservatives have destroyed the economy. And the only reason we fund the food stamp program through the annual farm welfare entitlement bill is that the farm lobby says no farm welfare entitlements, no food stamps.

And unlike farm welfare entitlements, food stamps are means-tested.

As for verifying that food stamp recipients are legally here, let's also verify that farmers are not hiring anyone who's not legally here.

skint: food stamp funding has increased because the conservatives have destroyed the economy. And the only reason we fund the food stamp program through the annual farm welfare entitlement bill is that the farm lobby says no farm welfare entitlements, no food stamps.

Politicians DECIDE what is in any bill......NOT Farmers...Not lobbyists.

Politicians..... 'attach'.

Glad you like the 'ammendment'........It's a GOP ammendment.

E-Verify and SAVE will do the same thing.....Pity we don't do the same with Food Stamps recipients as to qualifying and STAYING on.

Cards are sold on Craigs List, swapped at liquor stores, swapped at party stores, sold for 1/2 value and spent in casinos.

I see people purchasing steaks, lobster, and the best of food the average person can't afford on their WAGES.

You seem to think that farmers are all small.....Government wants to eliminate the small farmer and the 'greenies' are out to do just that for them so that Government can have total control of our food supply.

Refer back to the 'dust' regulation the EPA desires and has put off ....for now...until AFTER the election.

Refer to how politicians subject small farmers to lack of water because of the 'greenies'.

Refer to how many LARGE corporate farms that are left ALONE and receive FARM welfare.

Large farms and agribusinesses.... are also the most profitable farms......they are eligible for massive subsidies from us the taxpayer as long as they grow the crops the government wants them to grow.

Small lower-income farms growing the same five crops (wheat, corn, cotton, rice, soybeans) receive only a fraction of what large farms receive.

It's manipulation by the GOVERNMENT and POLITICIANS.

Still the average person has NO idea that the Farm Bill also includes the massive Food Stamp and SNAP program....plus marketing and promotion....Michelles program recieves funds to promote..... FROM the FARM BILL.

The media buries it and blames small farmers and those they wish to protect.